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How was Blackstone’s exit from commodity bourse MCX

13 December, 2016

Private equity firm Blackstone has struck its second full exit from India this year by selling its entire stake in Multi Commodity Exchange of India Ltd (MCX), bringing to an end its under four-year-old bet on the firm.

Blackstone held 4.79% stake in MCX as of 30 September and is believed to have pocketed around Rs 305 crore ($45 million) from the stake sale. Bulk of this was through a block deal on NSE on Friday.

Foreign portfolio investor Swiss Finance Corporation (Mauritius) Ltd bought much of this stake, stock exchange filings show.

Blackstone had originally picked up a 2% in MCX for Rs 104 crore through market deals in early 2013. A year later, it increased its stake by acquiring an additional 2.79% in the commodity bourse for Rs 81.5 crore. 

Blackstone is believed to have generated an internal rate of return (IRR) of around 16%, according to VCCircle estimates, not counting dividend earnings. Returns in dollar terms would be lower, due to appreciation of the greenback against the Indian currency.

PE firms typically target IRR of 20-30% in local currency, which means Blackstone has had a modest profit from MCX transaction.

An email query sent to Blackstone did not yield any response at the time of the publishing this article.

The PE firm had invested in MCX as an extension of its bet on what was then the Jignesh Shah-led group. In 2012, Blackstone had also bet on Future Technologies (India) Ltd and continues to hold 7% stake in the company.

Soon after its investment in the two firms, FTIL and its promoter were allegedly found responsible for the Rs 5,500 crore fraud involving another group entity National Spot Exchange (NSEL).

MCX’s shares on BSE last traded at Rs 1,341.9 each, up 1% in a weak Mumbai market on Monday.

Blackstone exits

For Blackstone, this is the second exit from a public market portfolio company in India this year. In October, it exitedconstruction firm NCC Ltd after selling its remaining 2.67% stake.

The PE firm made around Rs 135 crore to Rs 140 crore through the stake sale in the final tranche. It had been offloading shares in NCC since August and in total pulled out around Rs 500 crore from the sale of its 9.9% stake in NCC, around the same amount it invested.

In July, it sold another large chunk of shares in Gokaldas Exports. Blackstone had invested in Gokaldas around the same time it bet on NCC, in 2007, just months before the stock market tanked.

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How was Blackstone’s exit from commodity bourse MCX

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